GM as a Cautionary Tale

Jim Blasingame

One of my 2006 predictions was that at least one U.S. car manufacturer would file for bankruptcy that year. Turns out my vision was pretty good, if not my timing.
Once-venerable Chrysler filed for Chapter 11 bankruptcy protection on April 30th of this year. And after decades as the largest car company in the world and one of
America's greatest industrial success stories, General Motors filed for Chapter 11 June 1st. 
It's important to note that the Big Three - including Ford - are not the entire
U.S. auto industry. The rest are foreign-owned companies, none of which are exactly thriving in the current economy, but neither are they in peril of failure.
So how has GM and Chrysler gotten into this mess? Two reasons: 1) Bad management decisions; 2) United Auto Workers
Union (UAW).
Bad management can be replaced with better ones in any given year. But for generations the Big Three have allowed the UAW to demand and get contract concessions that have proved unsustainable in the 21st century global marketplace.
As you read this, at a time when two of the Big Three have required billions in government bail out and still suffered bankruptcy - fully half of which blame must be laid at the feet of the UAW - certain lawmakers are pushing a bill that would increase the ability of unions to organize more easily in smaller businesses. Without any sense of irony, the federal government is nationalizing parts of one union-laden industry, while trying to make forming unions easier in others. What's wrong with this picture?
The bill in question is the Employee Free Choice Act (EFCA). This is a misleading title because one of the markers of the bill is to remove the secret ballot provision, long required by federal labor laws, and replace it with the ability for a union organizer to push a ballot in front of employees and require them to vote while being watched. There is more bad news for small businesses in this bill, but isn't messing with the sanctity of the secret ballot - a hallmark of
America - enough to oppose this legislation?
If the EFCA (a/k/a Card Check) becomes law, the following year I will be forced to make this prediction: Many small businesses will make one of three unnatural management decisions if pushed to unionize due to EFCA: 1) off-shore more jobs; 2) Limit growth to stay under the number of employees that EFCA allows; or 3) just close up, rather than prolong the inevitable experience of GM and Chrysler.
Write this on a rock... The Employee Free Choice Act is not only bad policy in the 21st century, it's un-American.

Jim Blasingame, small business expert and host of The Small Business Advocate Show
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